One way I get boulders is to take a terrain, clip it, and go to the effects tab in the terrain editor and press "Rocks". This makes rounded shapes on your terrain. Once you go back into the scene, squish down the terrain and resize it as you like, and put it under the surface of your water or your main terrain, with just the tops of the rocks sticking out. You can increase the resolution of the rock terrain to get better quality.

Sgiathalaich